Agricultural Policy and Trade

Running head: AGRICULTURAL POLICY AND TRADE
Agricultural Policy and Trade
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1AGRICULTURAL POLICY AND TRADE
Table of Contents
Trade Liberalisation Scenario for UK Agricultural Post-Brexit................................................2
Two Alternative Trade Scenarios for UK Agriculture Post-Brexit.......................................2
WTO Tariffs on Imports....................................................................................................2
Trade Liberalisation:..........................................................................................................3
Welfare Improvement by Imposing Optimum Tax....................................................................3
References..................................................................................................................................6

2AGRICULTURAL POLICY AND TRADE
Trade Liberalisation Scenario for UK Agricultural Post-Brexit
Trade liberalisation is the abolition or depletion of restrictions or trade obstacles like
duties and surcharges as tariff and licensing rules and quotas as no-tariff barriers on the free
exchange of goods and services between nations (Fan, Li and Yeaple 2015). Brexit is derived
from “British Exit”. This means the UK’s decision to leave the European Union.
UK uses its 71% of land for farming and 19% of land for arable crops. Arable crops
include wheat and barley. In terms of value at market prices, agricultural production of UK
was £25.8 billion in which cereals was accounted for £3.5 billion. Similarly, pork was
accounted for £1.3 billion, milk was accounted for £4.6 billion and eggs were accounted for
£0.7 billion in terms of value at market prices. The EU is the only largest trading partner of
UK, which accounts for 70% of imports and 60% of exports. In pre-Brexit situation, UK was
benefited by free trade within European Union. Both EU and UK charges tariffs on imported
products from other countries into the EU. In post-Brexit situation, UK-EU trade comes
under WTO rules. IT has a significant effect on agriculture. Tariffs on agricultural products
are higher than other oods and services (Holmes, Rollo and Winters 2016). Therefore, meat,
dairy and cereals sectors dependent on the export market will be greatly affected. For an
example, the tariff under WTO rule on cheese is 40% to 50% based on the variety of cheese.
Two Alternative Trade Scenarios for UK Agriculture Post-Brexit
WTO Tariffs on Imports
Price Increase: Import tariff will increase the cost of importers and so costs of consumers.
This will increase 30% price of meat and dairy products, 18% price of veetables like tomato
and 10% price of broccoli.
Opportunities for UK Business: Import tariff will give the opportunity to British products
as an import substitution. British Products will be more attractive to the domestic consumers